The public comment on Maryland sports betting includes some thoughts of my own.
The public had until Monday to comment on Maryland draft sports betting regulations. The end of the 30-day window for submitting comments follows a public meeting on September 22.
After reviewing the regulations, I submitted comments on one particular aspect of the draft regulations. This article tracks and in some places reproduces my comments. While several aspects of the draft regulations raised questions, one stood out as more worthy of comment than others.
Contained within Chapter 14 of the Sports Wagering Requirements and Limitations; Section .01 – Authorized Wagers Subsection; C. – Verifiable Outcomes; Regulation 4 is the following:
Within 60 days after the Commission approves the request from a governing entity, a sports wagering licensee may only use official league data to determine the result of a wager placed.
Official data back in a big way in Maryland sports betting
The draft MD sports betting rules bring back official league data more aggressively than any other jurisdiction in the United States, and perhaps the world. Indeed, as drafted, the Maryland rules require the adoption of official league data for settling all wagers within 60 days after a sports league makes a request.
Moreover, unlike the efforts that gained traction in Illinois, Michigan, Tennessee, and Virginia, which restricted official data mandates (still without a valid justification) to in-play wagers, Maryland would require official league data for anything a sports league wants.
As free as the air?
While the sports leagues and their data partners now collect millions of pieces of data, some of which is not replicable, the vast majority of wagers being placed in the United States do not rely on this type of information to have the bets settled in a consistent, fast, and fair way.
Indeed, as Justice Brandeis said in dissent in the case of International News Service v. Associated Press, the facts in dispute are “as free as the air to common use.” The data that most bets rely on are the same pieces of information that have been published in the country’s newspapers since 1845, when the New York Daily News ran the first iteration of what we would call a box score.
A data chokepoint
The mandate for the use of official league data raises market integrity concerns as well. To the extent that official league data originates from a single-source collection point, there is a risk that one error, intentional or by accident, could threaten the entirety of the feed.
This single point of failure can be eliminated by encouraging a competitive market for the independent collection of data. There is no reason that sports leagues (or official data distributors) could not compete in a competitive market.
Should they truly possess a superior product with reduced latency, the market should reward them.
Flashing back across the water
Looking back to before official data mandates gained any traction, an executive from one of the leading data suppliers spoke at a conference in Holland. The executive not only acknowledged a lack of intellectual property rights in data being used to settle bets, but also acknowledged that the major data suppliers provide both official and unofficial data depending on which licenses they hold.
Indeed, the executive said:
“…we provide a mix of official and unofficial data, none of us have a monopoly on all of the data licenses in the world, so we provide a mix of both and we apply the same quality controls to official and unofficial, it is just generally a latency issue that unofficial data may well be slower so there isn’t necessarily a quality gap.”
Nobody wants bad data
Unreliable data is bad for business. Sportsbooks lose money if they do not have fast, accurate, and reliable data. Consumers want to trust bookmakers and know that their bets are going to be settled in an expected and transparent way.
Unreliable data has not been an ongoing issue in the US sports betting market. In fact, there is really no evidence that there are unscrupulous data providers ripping off bookmakers with bad data on major sports across the United States.
Corruption of sporting events happens, but creating a single data source creates a greater risk than a robust market with options. We saw in 2016 when tennis umpires were allegedly delaying the inputs of points into their proprietary tablets, allowing courtsiders to effectively front-run the market, that official data was no panacea for corruption.
If consumer protection is the goal …
If there is a genuine desire to protect consumers, the only solution is the most competitive data market possible.
States should work to lower barriers to entry, effectively taking the opposite approach to what they have been doing and mandating that there be at least a handful of independently collected data sources before wagers can be accepted on a sport.
Instead, state regulators have played into sports leagues’ desires, gifting a solution to a problem that has not shown itself to exist. With the rising costs of official league data, we are likely to see that consumers will bear the brunt of the added costs, all while not gaining integrity-boosting protections.